CANNON 

SPEECH  BEFORE 
THE  COMMITTEE  ON 
PACIFIC  RAILROADS 


University  of  California  •  Berkeley 


SPEECH 


or 


HON.  MARION  CANNON, 


(I 

OF    CALIFORNIA, 


BEFORE  THE 


COMMITTEE  ON  PACIFIC  RAILROADS. 


WASHINGTON: 

GOVERNMENT   FEINTING   OFFICE. 
1894. 


Mr.  CHAIRMAN:  The  bill  now  before  the  committee,  extending  the 
time  for  the  payment  of  the  Pacific  railroads  debts,  is  one  of  the  most 
important  that  has  been  presented  to  this  body  for  many  years.  It  is 
important  to  the  United  States  in  attempting  to  secure  the  payment  of 
about  $178,000,000,  principal  and  interest,  from  the  Union  and  Central 
Pacific  roads,  or%froin  the  Central  Pacific  alone  about  $77,000,000. 

It  seems  to  me  that  the  main  question  to  be  considered  by  this  com- 
mittee is,  whether  the  conduct  of  the  u  Big  four" — Stanford,  Huntington, 
Hopkins,  and  Crocker — has  been  of  such  a  character  as  to  inspire  in  us 
a  confidence  sufficient  to  grant  them  an  extension  of  time  in  which  to 
pay  this  debt;  whether  they  have  so  administered  the  great  trust 
reposed  in  them  by  the  act  of  1802  as  to  warrant  such  confidence  in 
their  honesty  in  the  future? 

It  seems  to  me,  that  having  violated  every  trust  reposed  in  them  by 
the  people  of  the  United  States  when  we  entered  into  a  partnership 
with  them  in  the  construction  of  these  great  public  highways^  that  they 
are  not  now  entitled  to  any  consideration  whatever  at  our  hands. 
After  violating  every  contract  and  law  creating  the  Central  Pacific 
Company,  1  believe  the  partnership  should  now  be  forever  dissolved 
and  these  bandits  retired  to  private  life,  or  the  State's  prison,  where  bet- 
ter men  are  serving  the  State.  If  this  great  Government  can  not 
enforce  its  own  laws  against  this  corporation;  if  we  must  be  continually 
harassed  by  the  belittling  suits  that  have  so  persistently  occurred  since 
the  issue  of  these  bonds;  if  we  must  abdicate  our  sovereignty,  and 
through  our  officials  be  made  to  contend  for  petty  successes  or  dis- 
astrous defeats  in  the  forum  of  our  own  credits,  then  it  is  time  for  a 
complete  divorce  of  the  Government  from  this  corrupt  gang  of  bandits, 
who  have  preyed  upon  both  the  people  and  the  Government  for  nearly 
thirty  years. 

There  is  another  reason  why  we  should  wind  up  the  business  of  this 
corporation,  and  this  reason  is  the  most  important  to  Stanford,  Hunt- 
ington,  Hopkins,  and  Crocker,  and  their  estates.  Under  the  laws  of 
California,  the  stockholders  of  this  corporation  are  individually  liable 
for  the  debts  of  the  company  in  an  amount  equal  to  the  stock  they 
hold.  The  law  and  the  constitution  of  the  State  also  declare  that  no 
corporation  shall  be  granted  a  franchise  for  a  longer  period  than  fifty 
years.  An  extension  of  time  would  be  making  a  new  contract  with 
these  corporators,  and  would  release  them  from  all  personal  liabilities 
for  the  rascalities  and  frauds  perpetrated  by  them  in  the  building  and 
management  of  these  roads  up  to  the  time  the  new  contract  is  made. 
The  charter  of  the  Central  Pacific  was  granted  by  the  California  legis- 
lature June  27,  1861,  and  runs  fifty  years,  and  the  State  constitution 
forbids  the  renewal  of  any  franchise  after  it  has  expired.  Therefore, 
if  the  time  of  settlement  is  extended  beyond  the  year  1911,  the  corpo- 
ration will  be  dead  and  no  power  on  earth  can  resurrect  it. 

You  will  therefore  see  by  this  brief  statement  the  importance  of  this 
extension  of  time  to  the  big  four — Stanford,  Huntingtou,  Hopkins,  and 
Crocker,  and  their  estates.  First,  it  will  release  them  from  all  personal 

1 


liabilities  for  their  rascalities;  second,  by  extending  the  time  for  settle- 
ment beyond  the  life  of  the  corporation — June  27,  1011 — they  will  beat 
the  Government  out  of  the  whole  amount  of  the  debt.  Mr.  Hunting- 
ton  stated  in  his  letters  to  Mr.  Goulton  that  it  had  cost  his  company 
$1,700,000  to  defeat  Tom  Scott  and  his  "  Texas  Pacific"  in  Congress, 
and  in  view  of  this  fact  what  should  this  Congress  expect  from  his 
company  ? 

To  be  relieved  of  all  personal  liabilities  and  an  extension  of  time 
beyond  the  life  of  his  company  would  be  worth  the  whole  amount  of 
the  debt,  $77,000,000. 

Now,  Mr.  Chairman,  it  seems  to  me  that  these  corporations  are  put 
upon  trial  before  this  Congress,  when  they  come  here  and  ask  for  an 
extension  of  time,  for  one  hundred  years,  in  which  to  pay  their  debts. 
I  do  not  desire  to  do  these  corporations  any  injustice,  and  if  their 
management  of  the  great  trust  given  into  their  charge  have  been  con- 
ducted upon  honest  methods  they  should  have -the  time  extended. 
But  if  it  shall  appear  to  this  House  that  the  methods  employed  have 
not  been  honest,  but  the  most  corrupt  and  vicious,  so  much  so  that  it 
has  become  a  national  disgrace,  then  no  extension  of  time  should  be 
given,  and  they  should  be  wiped  out  with  all  possible  speed. 

The  partnership  entered  into  between  the  Government  and  the  Union 
and  Central  1'acitie.  Kansas  Pacific.  Sioux  <  'it y  and  Pacific,  and  the 
Central  Branch,  as  set  forth  in  the  several  a<-ts  of  Congress,  were  a> 
follows:  The  Cnited  States  leaned  them  *ii  iJi'J.'J.r.ll'  in  bonds  bearing 
6  percent  interest  and  running  thirty  \ears.  They  also  authorized 
the  companies  to  issue  first-mortuaue  bonds  to  an  equal  amount  of 
$64,623,512.  We  also  gave  them  26,029,534  acres  of  land,  from  which 
they  have  realized  $30,479,213,  and  they  have  remaining  unsold  lands 
worth  $26,504,270,  making  a  total  gift  of  land  which  amounts  to 
$65,083,483.  We  granted  them  a  right  of  way  400  feet  wide,  with  all 
necessary  room  for  depots,  machine  shops,  and  side  tracks.  We  vested 
these  corporations  with  control  of  these  great  public  highways  across 
the  continent,  and  gave  them  power  to  establish  rates  of  transporta- 
tion; that  is,  the  power  to  levy  toll  upon  all  the  tratlic  which  might 
pass  over  these  roads.  We  also  gave  them  the  right  of  eminent 
domain. 

These  two  last  great  powers  are  vested  alone  in  Congress,  and  they 
have  been  farmed  oiit  to  these  corporations.  But  in  order  to  guard 
against  all  possible  abuses  of  these  great  powers,  and  to  insure  good 
management  and  personal  responsibility,  Congress  enacted  that  in 
return  for  the  nation's  liberality  in  granting  these  great  powers  and 
immense  sums  in  bonds  and  lands,  these  companies  should  bind  them- 
selves to  have  their  stocks  fully  paid  up  in  <-a*h;  to  build  iirst-class 
roads;  to  carry  freight  for  the  Government  at  the  same  rates  as  for 
private  individuals;  to  operate  all  the  lines  in  the  Pacific  system  as 
one  connected,  continuous  line,  and  to  give  to  each  equal  facilities  in 
rates,  time,  and  transportation,  and  to  convey  telegraphic  messages 
upon  equal  terms  to  all  persons.  They  also  agreed  to  make  annual 
reports  to  the  Government,  giving  the  names  of  their  directors  and 
stockholders,  and  the  amount  of  their  stock  actually  paid  up  in  cash. 
and  the  amount  of  receipts,  expenditures,  and  indebtedness,  under 
oath.  They  also  agreed  to  pay  5  per  cent  of  their  net  earnings  into  a 
sinking  fund  and  one-half  the  cost  of  Government  transportation  to 
pay  the  principal  and  interest  upon  the  debt  they  owed  the  Govern- 
ment. 

With  these  binding  obligations  resting  upon  them  what  did  these 


companies  do  ?  They  organized  construction  companies,  through  which 
they  let  contracts  to  themselves  at  immense  prolits.  The  Union  Pacific 
had  her  "  Credit  Mobilier,"  the  Central  Pacific  had  "  C.  Crocker  &  Co. 
Contract  and  Finance  Company;"  "Shoemaker  &  Co."  built  the  Kan- 
sas Pacific,  and  John  I.  Blair  built  the  Sioux  City.  The  books  of  all 
these  companies  have  been  destroyed,  so  that  the  actual  cost  of  build- 
ing these  roads  can  not  be  given,  but  the  records  from  other  sources  are 
sufficient  to  give  a  very  close  estimate  of  the  cost.  I  will  now  give  you 
the  cost  of  constructing  these  roads  and  the  amount  of  stocks  and  bonds 
issued  by  the  boards  of  directors  to  themselves  through  these  construc- 
tion companies,  as  reported  by  the  "Pattison  commission,"  known  as 
"Senate  Ex.  Doc.  No.  51,  Fiftieth  Congress,  first  session:"  Union 
Pacific  cost  $38,824,000.  The  board  of  directors  issued  to  themselves, 
through  the  Credit  Mobilier,  in  stocks  and  bonds,  $109,814,812,  mak- 
ing a  clear  steal  of  $70,990,812.  The  Central  Pacific,  including  the 
Western  Pacific,  was  built  for  $40,000,000,  and  Stanford,  Huntington, 
Hopkins,  and  Crocker  issued  to  themselves  stocks  and  bonds  to  the 
amount  of  $124,211,080,  making  a  clear  steal  of  $84,21 1 ,680.  The  Kan- 
sas Pacific  was  built  for  $11,800,000,  and  stocks  and  bonds  were  issued 
to  the  amount  of  $25,028,250,  making  a  clear  steal  of  $13,228,250. 

The  Central  Branch  was  built  for  $2,731,347  and  stocks  and 
bonds  were  issued  to  the  amount  of  $4,200,000,  making  a  clear  steal  of 
$1,468,052. 

The  Sioux  City  branch  was  built  for  $2,600,000,  and  stocks  and  bonds 
were  issued  to  the  amount  of  $5,047,720,  making  a  clear  steal  of 
$2,447,720. 

The  Southern  Pacific  was  built  for  $27,216,931,  and  Stanford,  Huu- 
tiugton,  Hopkins,  and  Crocker  issued  to  themselves,  in  stocks  and  bonds, 
$82,756,486,  a  clear  steal  of  $55,539,554. 

The  California  and  Oregon  was  built  for  $3,505,609,  and  Stanford, 
Huntiugton,  Hopkins,  and  Crocker  issued  to  themselves,  in  stocks  and 
bonds,  $12,500,000,  making  a  clear  steal  of  $8,994,391. 

The  Oregon  Short  Line  was  built  for  $14,000,000,  and  stocks  and 
bonds  were  issued  to  the  amount  of  $29,000,000,  making  a  clear  steal  of 
$15,000,000. 

Now,  Mr.  Speaker,  before  we  go  any  further  with  this  history  of 
these  bandits  let  us  group  these  stealings  in  such  shape  as  to  be  handy 
for  future  reference,  for  they  will  have  an  important  bearing  upon  the 
question  whether  these  companies  should  be  permitted  to  exist  any 
longer. 

Stealings  of—- 
Union Pacific $70,990,812 

Central  Pacific 84,  211,  680 

Kansas  Pacific 13,228,250 

Central  Branch 1,408,650 

Sioux  City  Branch 2,  447,  720 

Southern  Pacific 55,  539, 554 

California  and  Oregon  from  Delta 8,  994,  391 

Oregon  Short  Line , 15, 000,  000 

Total  stealings  upon  construction ^ 251,  881, 057 

This  is  not  all  the  stealings  these  companies  perpetrated  by  any 
means,  they  are  only  the  commencement. 

By  the  act  of  March  3,  1873,  the  Union  Pacific  was  prohibited  from 
the  payment  of  dividends,  except  from  actual  net  earnings,  yet  they 
declared  dividends  in  violation  of  this  act.  By  this  act  the  Union 
Pacific  was  prohibited  from  issuing  stock  or  mortgages  or  any  pledges 


upon  their  company  or  its  future  earnings  without  permission  from 
Congress.  Yet  in  1880  the  company  increased  its  stock  from  $30,762,000 
to  $50, 762,000  by  the  consolidation  of  the  Union  Pacific,  Kansas  Pacific, 
and  Denver  Pacific  in  violation  of  the  act  of  March  «'f,  1873,  and  a  little 
later  in  the  same  year -the  stock  of  the  consolidated  company  was 
increased  to  $00,868,500  in  violation  of  law,  whereby  Jay  Gould  pock- 
eted about  814,000,000. 

In  1879  they  issued  collateral  trust  bonds  for  $4,852,000,  and  pledged 
securities  of  the  company  in  violation  of  the  law.  In  1883  they  issued 
trust  bonds  for  $4,500,000  in  violation  of  the  law. 

In  1882  and  1884  they  guaranteed  rhe  payment  of  interest  on  the 
bonds  of  the  Oregon  Short  Line  for  $14,000,000  in  violation  of  law. 
This  was  done  by  the  board  of  directors  of  the  Union  Pacific,  many  of 
whom  held  these  bonds,  thus  voting  money  from  the  Union  Pacific 
treasury  into  their  own  pockets. 

About  the  same  time  they  guaranteed  interest  on  t  lie  bonds  of  the  St. 
Joseph  and  Grand  Island  Kailroad,  amounting  to  $6,961,922,  in  viola- 
tion of  the  law.  They  also  used  the  stock  and  bonds  of  the  Union 
Pacific,  in  violation  of  the  act  of  1873,'in  the  construction  of  about  40 
branch  lines  and  in  building  np  J5  or  20  private  corporations,  in  which 
members  of  the  board  of  directors  were  the  principal  stockholders,  and 
so  long  as  these  private  corporations  paid  dividends  t  lie  old  Union 
Pacific  was  not  uin  it."  But  when  they  ceased  to  pay  the  board  of 
directors  voted  the  stock  over  to  the  parent-  company,  and  in  some 
instances  voted  to  guarantee  the  payment  of  the  interest  upon  the 
bonds,  as  was  done  in  the  case  of  the  Oregon  Short  Line.  NYhile  the 
majority  of -the  board  of  directors  held  the  stock  and  bonds  of  these 
branch  lines  they  leased  them  to  the  Union  Pacific  for  large  sums, 
amounting  in  the  aggregate  to  about  *:»s,soo,OUO. 

At  the  risk  of  being  tedious  1  will  here  give  you  the  names  of  :>2  of 
these  branch  lines  with  a  mileage  of  4,015  miles: 

Nevada  Central. 
Utah  F.nstrrn. 
"L:i\vrriice  and  Kmporia. 
St.  .Joseph  and  (Jrand  Island. 
South  Park  and  Lcadville. 
Denwr  and  Boulder  Valley. 
Denver  and  South  Park. 
Kansas  Central. 
Greely  and  Salt  Lake. 
Leavensworth  and  Topeka. 
Mauhatten  and  Alma. 
Denver  and  Middle  Park. 
Georgetown  and  Leadville. 
Larmi«  and  North  Park. 
Oregon  Short  Line. 
Omaha  and  KYpnblican  Valley. 


Utah  Ontral. 

Sail   Lake  and  \\Y-t.-rn. 

.Junction  City  and  Fort  Kearney 

Echo  and  Park  (  it  \ . 

Omaha  and  JJlark  Hills. 

Salina  and  Southwestern. 

Soloman  Kailroad. 

Saliiia,  Lincoln  and  Western. 

Colorado  Central. 

Utah  and  Nevada. 

Montana  Railroad  Company. 

Manhattan  and  Blue  Valley. 

Denver,  Marshall  and  Moulder. 

Golden  and  Cariboo. 
j  Central  Branch. 
i  Utah  and  Northern. 


In  addition  to  these  branch  lines,  many  other  corporations  were 
organized  from  the  earnings  of  the  Union  Pacific,  such  as  elevators, 
smelting  works,  street  railways,  etc.  And  farmers  testified  before  the 
Pattisou  committee  that  they  were  charged  from  5  to  8  cents  more  for 
freight  to  Chicago  than  these  elevator  companies,  thus  forcing  them  to 
sell  their  grain  to  these  elevators. 

We  also  learn  from  this  report  that  the  directors  of  the  Union  Pacific 
voted  themselves  a  rebate  to  the  Omaha  Grant  Smelting  Works  of 
$570,000,  and  upon  the  elevators  to  the  amount  of  millions  of  dollars, 
thereby  beating  the  miners  and  farmers  out  of  their  hard-earned  profits. 

The  names  of  these  companies  can  be  found  in  the  report  of  the  Pat- 


tisou  commission.  For  the  payments  of  these  rebates  the  Pacific  rail- 
roads voted  to  themselves  and  their  pet  companies,  out  of  the  funds 
which  should  have  been  applied  to  the  payment  of  the  Government 
debt,  $25,866,235.  They  also  refused  to  consider  these  rebates  in  their 
report  of  the  net  earnings  of  their  roads,  from  which  the  5  per  cent 
payments  to  the  United  States  were  to  be  made. 

The  law  required  them  to  pay  up  their  capital  stock  in  full,  and 
make  oath  to  that  effect,  and  file  it  with  the  Interior  Department. 
They  complied  with  the  law  so  far  as  to  making  the  oath,  but  all  hon- 
est men  will  hold  them  guilty  of  perjury  as  to  the  amount  of  stock 
they  swore  had  been  paid  up. 

I  herewith  furnish  a  table,  compiled  by  the  Pattison  commission 
from  these  affidavits  on  file  in  the  Interior  Department,  and  you  will 
see  by  this  table  the  amount  actually  paid  up  was  $1,797,350,  while 
these  four  men  swore  that  it  was  $97,098,590  —  only  a  small  lie  of  about 
$95,000,000.  Had  any  of  the  common  people  made  such  an  oath  they 
very  likely  would  have  been  serving  the  State  in  some  penal  institution. 
But  here  is  the  table,  with  the  names  of  the  parties: 

Stock  table. 


Con.pany. 


,  Kames  of  decent, 


paid  in.       ;1 


Union  Pacific $400,650       $36,762,300  j  Oliver  Ames i  Sept.  27, 1870 

Kansas  Pacific i        250,000  5,072,500!  K.  E.  Carr \  Sept.  28, 1872 

Central  Pacific 760,  000  !      54,  283,  Iflii      Lelnml  Stanford I  Sept,  18, 1871 


Central  Branch 
Total . . 


386,  700  j  980,  600     R.  M.  Pomeroy Sept.  21, 

1,797,350  i       97,098.590 


It  is  no  answer  to  the  Government  that  the  managers  of  these  com- 
panies did  only  that  which  the  managers  of  railroads  in  other  sections 
did.  These  lines  were  built  upon  public  credit.  They  were  public  high- 
ways in  the  broadest  sense  of  that  term.  The  managers  were  acting  as 
trustees  of  a  national  highway,  and  they  can  not  plead  any  lawful  jus- 
tification for  making  false  affidavits,  which  state  that  $97,098,590  of 
stock  was  actually  paid  for,  when  in  fact  less  than  two  millions  had 
been  so  paid  for. 

Now  let  us  return  to  the  big  four  in  California,  and  if,  when  I  get 
through  with  exposing  their  rascalities  in  the  management  of  the  Cen- 
tral Pacific  and  branch  lines,  this  Congress  determines  to  continue  the 
management  of  these  roads  in  their  hands,  the  people  of  the  Pacific 
coast  will  have  to  submit  to  their  robberies  for  another  hundred  years. 
Much  has  been  said  about  the  ownership  of  the  stock  in  the  Central 
Pacific.  Huntington  denies  that  he  owned  a  large  block  of  this  stock; 
but  that  the  big  four  owned  nearly  all  this  stock  is  evident  from  the 
fact  that  they  held  possession  of  the  board  of  directors,  and  voted 
contracts,  made  leases,  and  robbed  both  the  people  and  the  Govern- 
ment for  nearly  thirty  years. 

It  is  no  answer  to  say  that  this  was  done  through  private  companies 
organized  by  these  men  for  that  purpose.  Stanford,  Huutington,  Hop- 
kins, and  Crocker  can  not  shield  themselves  behind  these  private  cor- 
porations which  were  organized  for  the  purpose  of  plunder.  Therefore, 
when  the  Contract  and  Finance  Company  voted  the  stock  of  the  Cen- 
tral Pacific,  it  was  the  vote  of  the  big  four,  as  they,  in  fact,  owned 
all  the  stock  in  these  private  corporations.  When  they  contem- 


plated  a  steal  they  generally  put  sufficient  stock  in  the  hands  of  one 
of  these  private  companies  to  carry  it  through  the  board,  and  but  few 
instances  occur  where  the  big  four  voted  more  than  a  few  thousand 
shares  of  stock,  as  shown  by  the  books  of  the  company  now  in  exist- 
ence. When  the  capital  stock  was  increased  from  $20,000,000  to 
$100,000,000,  in  1868,  the  Contract  and  Finance  Company  voted  141,000 
shares  out  of  a  total  of  151,520  shares.  Every  one  of  these  shares  at 
that  time  belonged  to  the  big  four. 

We  also  find  that  Stanford,  in  his  testimony  before  the  Pattison  com- 
mission (vol.  5,  p.  2069),  stated  that  the  Contract  and  Finance  Company 
distributed  to  them  in  stock  $54,000,000,  which  was  a  net  profit,  subject 
only  to  an  indebtedness  of  about  $3,000,000. 

This  $54,000,000  of  stock  was  divided  in  equal  shares  among  the  big 
four.  The  original  stock  in  the  Central  Pacific  was  *s,500,000.  In 
1864  it  was  increased  to  $20,000,000.  In  1868  it  was  again  increased 
to  $100,000,000.  This  increase  of  stock  from  $8,500,000  to  $100,000,000 
was  voted  by  the  holdings  of  the  big  four,  and  voted  to  themselves. 

They  then  tried  to  force  the  original  stockholders  to  exchange  their 
stock,  share  I'm-  share,  lor  t  lie  new  stock.  This  the  holders  of  the.  original 
stock  refu>ed  to  do.  and  all  dividends  were  refused  to  these  old  stock 
holders  unless  they  made  the  exchange.  This  led  to  suits  being  brought 
by  Sam  Brannon  and  others  tor  an  accounting.  These  suits  were  com- 
promised by  the  big  four  paying  from  *  ion  to  £1.000  per  share  for  the 
original  stock.  (Sec  evidence  of  Stanford,  vol.  5.  p.  i'<;41:  vol.  (J,  pp. 
2775,2779.)  The  evidence  on  which  the  successful  prosecution  of  such 
suits  would  depend  was  contained  in  the  books  of  the  <  'ontract  and 
Finance  Company,  and  rather  than  have  these  books  produced  in  court, 
which  \\ouhl  show  up  their  rascalities,  t  hey  paid  these  large  amounts 
for  the  outstanding  stock.  You  will  also  find  in  the  evidence  of  Stan- 
ford (vol.  :».  pp.  LMi.V..  LMIIKI,  that  each  of  the  big  four.  Stanford  Hunt- 
ington,  Hopkins,  and  Crocker,  received  s  i;;.n<n».oou  of  the  stock  from 
the  Central  Pacific  <  'ompany  as  his  >haie  of  the  protit>  of  construc- 
tion. 

These  suits  alarmed  the  big  four  ami  they  removed  the  contract  and 
finance  books  from  their  office  in  Sacramento  and  destroyed  them. 
Section  10  of  the  act  of  the  legislature  of  California,  dated  May  L'o. 
1861,  under  which  the  Central  Pacific  was  incorporated,  provided  that 
"the  directors  shall  cause  to  be  kept  a  book  to  be  called  KYcord  of 
Corporation  Debts."  and  in  this  book  the  secretary  was  required  to 
record  all  contracts,  etc.  This  book,  if  produced,  ought  to  throw  some 
light  upon  the  construction  of  the  road  by  the  ('ontract  and  Finance 
Company.  Hut.  strange  to  say,  there  were  many  things  recorded  in 
this  book  that  wereof  importance  to  the  big  four,  and  instead  of  destroy- 
ing it.  as  they  did  the  books  of  the  Contract  and  Finance  Company,  they 
cut  the  leaves  out  from  pages  4s  to  111.  inclusive.  If  such  methods  of 
concealing  their  dishonesty  is  approved  by  this  Congress,  the  people  of 
the  United  States  will  place-  the  responsibility  where  it  belongs — upon 
the  shoulders  of  a  majority  of  this  body.  Another  method  they  resorted 
to  was  to  pass  resolutions  in  the  board  of  directors,  by  the  votes  of 
themselves,  exonerating  themselves  from  all  rascalities  and  approving 
the  actions  of  their  president  when  he  succeeded  in  making  a  steal  of 
a  few  millions  from  the  old  company. 

When  the  Pattison  commission  ran  across  one  of  these  resolutions 
spread  upon  their  minutes  they  were  astounded  at  the  bold  attempt  of 
these  four  big  rascals  to  shield  themselves  and  their  private  fortunes 
from  the  penalties  of  the  law.  As  these -releases  have  been  studiously 


suppressed  and  kept  from  the  public  gaze,  I  will  here  produce  oue  of 
them  as  a  memorial  of  the  unadulterated  gall  of  the  big  four  in  their 
dealings  with  their  creditors.  It  is  as  follows : 

Whereas  the  president  of  this  company,  Leland  Stanford;  the  first  vice-president 
of  this  company,  Collis  P.  Huntiugton;  the  second  vice-president  of  this  company, 
Charles  F.  Crocker,  and  the  treasurer  of  this  company,  Timothy  Hopkins,  have 
done  various  acts  and  things  in  the  interest  of  and  for  the  benefit  of  this  company, 
and  have  made  various  payments  of  money  for  which  vouchers  have  not  been 
received  from  the  parties  to  whom  payments  were  made ;  and 

Whereas  the  nature  of  such  acts  and  things,  and  the  amount  of  such  payments 
have  been  exhibited  and  fully  made  known  and  explained  to  us:  Now,  therefore, 

Resolved,  That  the  stockholders  of  this  company  do  hereby  ratify  and  approve  all 
•uch  acts  and  doings  and  payments  made  by  said  persons,  and  do  hereby  expressly 
waive  the  production  or  tiling  of  vouchers  therefor;  and  the  president  or  a  vice- 
president  and  the  secretary  of  this  company  be,  and  they  are  hereby,  authorized 
and  directed  to  execute  full  and  complete  releases,  under  the  seal  of  the  company, 
to  said  Stanford,  Huntiugton,  Crocker,  and  Hopkins,  and  deliver  the  same  to  the 
respective  parties;  which  releases  shall  be  in  substantially  the  following  form,  to 
wit: 

Whereas  Leland  Stanford  has  been  and  is  the  president  of  this,  the  Central  Pacific 
Railroad  Company,  and  has,  under  and  by  virtue  of  the  power  and  authority  con- 
ferred upon  him  as  such  president,  done  certain  acts  and  performed  certain  services 
for  said  company,  both  in  the  city  and  county  of  San  Francisco,  State  of  California, 
and  in  the  city  of  New  York  and  elsewhere,  and  has  collected  and  received  certain 
moneys  of  the  company,  and  has  paid  out  and  expended  certain  moneys  for  the 
uses  and  purposes  and  for  the  benefit  of  said  company,  and  in  its  name,  place,  and 
stead,  and  on  its  behalf  has  made  and  indorsed  its  checks,  notes,  drafts,  and  bills 
of  exchange,  and  has  executed  and  delivered  contracts,  agreements,  and  instruments 
of  various  kinds,  has  borrowed  money  for  said  company  and  has  pledged  and  hypoth- 
ecated stock,  bonds,  and  other  securities  of  the  company  as  collateral  for  money 
borrowed,  has  made  purchases  for  said  company,  has  paid,  laid  out,  and  expended 
moneys  lor  interest,  freight,  loans,  insurance,  commissions,  purchases,  and  for  other 
obligations  and  purchases  of  said  con  pany,  and  has  employed  clerks,  agents,  coun- 
sel, attorneys,  and  others  in  and  about  the  business  of  the  company,  in  its  service 
and  for  its  benefit,  and  has  paid  salaries,  wages,  expenses,  and  compensation  to  per- 
sons so  employed,  and  has  compromised,  settled,  and  adjusted  claims  due  and  owing 
to  and  by  said  company,  and  lias  done  and  performed  various  acts  and  things,  and 
has  attended  to  and  managed  generally  the  affairs  and  business  of  said  company  in 
the  State  of  New  York  and  in  the  State  of  California  and  elsewhere,  and  has,  from 
time  to  time,  rendered  accounts  and  reported  his  acts  and  duties  to  said  company, 
which  said  accounts  and  reports  have  been  examined,  audited,  found  correct,  and 
approved  by  said  company,  about  and  of  all  which  this  company  has  full  advice 
and  knowledge ; 

"Now,  therefore,  the  said  Central  Pacific  Railroad  Company,  with  a  full  knowl- 
edge of  all  of  the  facts  and  circumstances  relating  to  said  transactions,  and  each  of 
them,  in  consideration  of  the  premises  and  of  the  payments  of  moneys  for  the  benefit 
of  said  company  by  the  said  Leland  Stanford,  and  for  and  in  consideration  of  the 
further  sum  of  one  dollar,  lawful  money  of  the  United  States  of  America,  to  it  in 
hand  paid  by  said  Lelaiul  Stanford,  hath  ratified,  confirmed,  and  adopted,  and  doth 
hereby  ratify,  confirm,  and  adopt  all  the  acts  and  deeds  of  said  Leland  Stanford  in 
the  premises  as  its  own  acts  and  deeds,  and  hath  remised,  released,  and  forever  dis- 
charged, and  by  these  presents  for  itself  and  its  successors  doth  remise,  release,  and 
forever  discharge  the  said  Leland  Stanford,  his  heirs,  executors,  and  administrators 
of  and  from  all  manner  of  action  and  actions,  cause  of  action  and  causes  of  action, 
suits,  debts,  dues,  reckonings,  bonds,  bills,  specialties,  covenants,  contracts,  contro- 
versies, agreements,  promises,  variances,  trespasses,  damages,  judgments,  executions, 
claims,  and  demands  whatsoever,  in  law  or  in  equity,  which  against  him  the  said 
company  ever  had,  now  hath,  or  which  it  or  its  successors  shall,  can,  or  may  have, 
for,  upon,  or  by  reason  of  any  matter,  acts,  or  things  whatsoever  done  in  and 
about  the  premises  from  the  beginning  of  the  world  to  the  date  of  these  presents, 
and  particularly  for  all  acts  done  by  him  as  president  of  said  company,  or  individu- 
ally, or  otherwise. 

"  In  witness  whereof  the  said  Central  Pacific  Railroad  Company  hath  caused  these 
presents  to  lie  signed  in  its  name  by  its  first  vice-president,  and  its  corporate  seal 
attested  by  its  secretary  to  be  hereunto  affixed  this  8th  day  of  October,  1887." 

These  releases  were  passed  periodically  by  the  board  of  directors, 
after  their  president  or  other  officers  had  been  successful  in  one  of  their 


8 

schemes  to  beat  the  Central  Pacific  out  of  a  few  million  dollars.  Their 
minutes  will  show  that  they  passed  one  of  these  releases  to  Stanford, 
as  president,  on  October  7,  1887,  after  he  had  let  the  contract  to  build 
the  California  and  Oregon,  from  Delta  to  the  State  line,  to  his  private 
comDany.  the  Pacific  Improvement  Company,  whereby  he  paid 
$8,000,000  in  stock  of  the  Central  Pacific,  and  $4,500,000  in  the  bonds 
of  the  Central  Pacific,  making  in  all  $12,500,000,  for  work  that  cost 
but  $3,505,609. 

One  would  naturally  suppose  that,  having  built  these  branch  lines 
with  the  earnings  of  the  Central  Pacific,  they  would  be  a  part  of 
that  company's  property.  But  it  appears  tliat  the  big  four  were  not 
in  the  railroad  business  for  their  health,  or  for  the  accommodation  of 
the  people,  or  to  increase  the  value  of  the  Central  Pacific  debt  to  the 
Government,  but  for  their  own  personal  interests.  They  therefore, 
after  using  the  earnings  of  the  Central  Pacific  in  constructing  these 
branch  lines  in  California,  entered  into  leases  with  themselves,  through 
their  construction  companies,  whereby  the  Central  Pacific  paid  to  the 
big  four,  for  rentals,  si>!>.!»li\:;7;U9. 

By  such  a  system  of  fraud  and  rascality  they  turned  over  to  them- 
selves all  the  earnings  of  the  Central  Pacific,  and  when  this  plan  failed 
to  absorb  all  the  money  in  the  treasury  they  usually  appointed  a  com- 
mittee to  invest  the  surplus.  For  instance,  at  the  Central  Pacific 
meeting,  August  26,  1886,  a  committee  was  appointed  to  -loan  or 
invest"  the  surplus,  and  at  a  meeting  held  September  30  following,  th« 
•ommittee  reported  as  follows  : 

BAM  1  '  i  :  *  N  «  i  >»  o,  September  30,  1886. 

To  the  Board  of  Directors,  Central  Pucijic  Hnilr.xtd  Company: 
GENT  i.i  :MK\  :  We,  the  undersigned  committee.  appointed  for  the  purpose  of  invest- 

ing  the  money  in  the  sinking  funds  of  this  eompany,  respectfully  report  as  follows: 
suitable  investment  presenting  itself  at  present,  we  have,  pursuant  to  the  reso- 

' 


lution  of  your  board,  dated  Auu'iiM  loaned  the  amount  in  t  he  Mnkin«r  fund, 

namely,  $:{,n:i:_>.  I  Id.:;:;,  to  the  1'aeilie  Improvement   <  ompany  on  thirty  days'  call  at  3 
per  cent. 

Yours,  respectfully. 

TlMolHY     Hnl'KIN-. 

\-\  CROCK  IK. 

\V.    V.    HUNTIM,l"N. 

You  should  always  remember  that  the  ••  I  *aei  tie  Improvement  Com- 
pany" was  organized  and  owned  by  Stanford.  Uuntington,  Hopkins 
and  Crocker,  as  was  also  the  "Contract  and  Finance  Company"  and 
others.  These  companies  were  organized  for  the  purpose  of  receiving 
the  earnings  of  the  Central  Pacific  and  distributing  them  to  the  big 
four.  Usually  the  earnings  are  passed  over  to  these  private  corpora- 
lions  oil  account  of  "leases,"  "constructions."  --repairs."  etc.,  and  then 
distributed  to  the  big  four.  This  x.l.n.'L*.  KM)  was  afterwards  turned  over 
to  Stanford,  Huntington  \-  Co.,  in  exchange  for  tifty-year  bonds. 
If  you  will  read  the  evidence  in  the  examination  made  by  the  Patti- 
son  commission,  you  find  that  Stanford  &  Co.,  as  directors  of  the  Cen- 
tral Pacific,  loaned  to  the  "  Con  tract  and  Finance  Company  "  $5,700,000, 
which  was  never  returned  to  the  Central  Pacific. 

Now,  1  have  shown  the  necessity  of  these  thieving  corporations,  in 
the  distribution  of  the  earnings  of  the  Central  Pacific.  To  credit  Stan- 
ford, Huntington,  Hopkins  and  Crocker  direct  with  the  enormous  profits 
they  receive  from  the  roads  they  operate  would  be  stating  the  truth  so 
the  people  could  understand  it,  so  they  resort  to  these  construction  com- 
panies to  cover  up  their  rascalities. 


The  Pattisou  commission ,  after  stating  many  of  the  facts  in  regard  to 
the  contracts,  leases,  etc.,  made  by  the  big  four  to  themselves,  sums  up 
their  rascalities  as  follows,  on  page  84  of  report : 

In  general,  it  may  be  said  to  be  established  by  the  evidence  that  all  the  construc- 
tion contracts,  and  all  the  important  con  tracts  for  materials  and  supplies,  were  made 
between  the  Central  Pacific  Railroad  Company  and  companies  controlled  by  Stanford, 
Huntingtou,  Hopkins,  and  Crocker.  These  four  persons  determined  the  terms  of 
all  these  contracts,  and  the  result  has  been  that  through  the  payments  made  by  the 
Central  Pacific  Railroad  Company  they  have  received  as  profits  a  vast  amount  of 
stocks  and  bonds.  Those  resulting  from  the  construction  contracts  above  stated 
represent  over  $100,000,000  in  stocks  and  over  $5,000,000  in  bonds. 

It  appears  from  the  books  of  the  company  that  from  the  very  inception  of  the 
enterprise  down  to  the  present  time  it  has  been  the  constant  practice  of  the  direct- 
ors of  this  company  to  permit  the  expenditures  of  very  large  sums  of  money  with- 
out requiring  any  sufficient  vouchers  disclosing  the  purposes  to  which  they  were 
applied.  A  detailed  list  of  these  insufficient  vouchers  will  be  found  in  Exhibit 
W,  attached  to  Stevens's  report,  volume  8.  These  insufficient  vouchers  aggregate 
$4,818,355.67. 

Soon  after  the  Pattison  commission  was  appointed  by  President 
Cleveland  these  rascals  undertook  to  prepare  their  books  as  well  as 
they  could  to  meet  this  investigation.  They  knew  that  the  books  of 
"S.,  H.,  H.  &  0.,"  that  is,  Stanford,  Huntingdon,  Hopkins,  and  Crocker, 
showed  standing  to  their  credit  over  $35,300,000,  and  this  immense 
Bum  would  not  look  well  standing  to  the  credit  of  these  paupers  when 
Pattison  cast  his  eye  over  the  figures,  so  something  had  to  be  done 
before  the  commission  arrived  in  California.  I  will  here  insert  a  letter 
from  Huntington  to  E.  II.  Miller,  jr.,  asking  him  to  doctor  up  these 
books  so  that  they  would  not  show  such  an  immense  sum  standing  to 
the  credit  of  the  big  four.  Miller,  who  was  so  handy  with  the  "Con- 
tract and  Finance77  books,  shows  Huntington  how  easy  it  can  be  done 
and  proceeds  to  outline  his  plan  in  his  reply  to  Huntington. 

Here  are  both  letters,  and  after  reading  them  you  will  again  see  the 
importance  to  these  rascals  of  their  private  corporations. 

NEW  YORK,  January  10,  1887. 

FIJIKXD  MILLKK  :  As  you  probably  know,  the  account  known  as  "S.,  H.,  H.  &C." 
shows  exceedingly  large  figures,  which  we  propose  now  to  cut  down,  since  there  are 
no  assets  to  represent  any  such  figures  as  these,  which  seem  to  show  large  amounts 
to  be  distributed.  I  don't  understand  this  account  myself,  do  not  know  much  about 
it,  in  fact,  and  Mr.  Crocker  does  not  know  any  more.  I  know  it  is  asking  consid- 
erable, but  I  would  like  to  have  you  look  over  these  accounts,  assets,  and  every- 
thing connected  therewith,  so  as  to  verify  them,  and  then  send  me  a  statement.  I 
have  great  confidence,  as  you  know,  in  Wm.  E.  Brown;  but  all  men  are  liable  to 
mistakes,  and  I  would  like  to  have  you  take  this  matter  up  and  attend  to  it,  as  we 
propose  to  charge  off  to  profit  and  Ions  enough  to  bring  the  figures  down  to  the  actual 
assets  on  hand.  It  is  possible  Willard  can  help  you  in  this  matter,  if  you  call  on  him 
to  do  so^  Mr.  Brown  will,  of  course,  do  all  he  can. 
Yours,  very  truly, 

C.  P.  HUNTINGTON. 


SAN  FRANCISCO,  CAL.,  January  25,  1887. 
C.  P.  HUNTINGTON,  Esq., 

Vice-President,  New  York: 

DEAR  SIR:  Yours  of  the  10th  instant  duly  received.  I  have  looked  into  the  matter 
of  the  very  large  balances  to  the  credit  of  the  individual  accounts  of  Lelaud  Stan- 
ford, C.  P.  Huntington,  Charles  Crocker,  and  estate  of  Mark  Hopkins  on  the  books 
of  S.,  H.,  H.  &  C.,  amounting  to  over  $35,300,000.  These  large  balances  arise  from 
the  following  causes : 

As  appears  by  the  books,  there  has  been  distributed  or  divided  at  various  times 
sundry  properties,  which  have  been  currently  charged  to  dividend  account,  amount- 
ing to  $9,250,520.21 ;  and  various  collections  have  been  credited  to  same  account,  for 
dividends  and  interest  received  on  stocks,  etc.,  amounting  to  $655,533.53 — the  debt 
balance  being  $8,594,986.68.  Among  the  items  charged  to  dividend  account  the 


10 

larger  cues  are:  In  June,  1877,  "S.  P.  bonds,  divided,"  $2,880,000;  in  1878,  Oakland 
water-front  stock,  divided.  $474,601.39;  Central  Pacific  Railroad  Company  stock  (E. 

B.  C.),  $5,192,550. 

Since  1875  interest  accounts  have  been  made  up  yearly  in  favor  of  and  amounts  cred- 
ited to  the  personal  accounts  of  Leland  Stanford,  C.  P.  Himtington,  Charles  Crocker. 
Mark  Hopkins,  and  estate  of  Mark  Hopkins,  and  charged  to  "interest  account," 
amounting  in  the  aggregate,  in  round  numbers,  to  $20,000,000.  This  was  all  right 
and  proper,  because  the  amount  of  capital  contributed  by  each  was  unequal;  and 
by  making  up  interest  on  the  full  amount  of  credit  balance  of  each  from  time  to  tim« 
each  got  in  effect  a  credit  to  which  he  was  entitled  for  interest  on  the  excess  he  had 
in  the  company.  This  matter  of  equalizing  the  interest,  however,  led  to  the  very 
large  amount  of  debit  which  now  appears  in  "  interest  account."  This  debit  repre- 
sents no  assets,  it  being  really  a  company  loss,  and  might  have  been  legitimately 
charged  to  profit  and  loss. 

Besides  these  large  items  of  interest  credited  to  the  individuals.  "S.. 
H.,  H.,  &   C.,"  above,  there  were  large   items  of  interest,  both 
received  and  paid,  leaving  the  balance  of  debit  in  interest  account .  $-?<>.  82rt.  789. 49 
There  also  appears  on  the  books  a  debit  balance  to  profit  and  lovs 

account  of '       1.  187.  215.  3J 

The  main  item  to  wedit  of  this  account  is  balance  transferred  from 

Contract  and  Finance  Company 2.  ii(is.  i'!>2.  29 

A  few  of  the  larger  items  to  debit  of  same  account  an- : 

Transfer  Market  Street,  Railroad 212.  sJM.Ol 

lone  property  stock  issued  and  divided 22!».  <  *'>.">.  «»0 

Rolling  stock  furnished  S.  I'.  K.  K'.  for  account  off. A   F.  Co 286,081.0] 

Estate  of  K.  B.  Crocker,  amount  of  note  given  to  K.  P>.  Crocker",  March 

24,1871,  by  Stanford,  Huntington,  and  Hopkins 1.2!)S.  140.00 

Amount  due  on   contract  of  S.  I'.  K.  K.  Co.  for   rolling  stock    not   fur- 
nished    135. 29 

There  are  many  other  entries.  The  above  are  stated  merely  to  give  you  some  idea 
of  tho  account. 

Now,  these  items  to  debit  of  dividend  account.  >ay  ••f'v."'!1 1  .!(MiJ»s  :  iuteioi  account, 
say,  $20,826,78!*.  W:  profit  and  loss.  say.  11,187,215.33,  amounting  in  aggregate  to 
$30,608,991.60,  are  properly  and  legitimately  chargeable  to  the  individual  accounts 
of  the  parties  "  S.,  H.,  H.,  A  C.,"  in  equal  amount*,  one-fourth  each. 

This  would  reduce  the  amounts  now  standing  to  their  credits,  as  foil. 

Present  credits,  aggn-nate  in  round  number-*,  say $;{">.  :!(>(),  <HH).  00 

Charges  as  above ' :;<>.<;(><>.  000.00 

Leaves  to  their  credit 4,  700, 000. 00 

Something  like,  the  amount  of  their  actual   assets.     In   the  above  are  stated  the 
amounts  as  they    appear  for    Heceniber  31,  1885,  tin-  accounts  <»i  '••  s..  II. ,11. .A 
are,  as  you  are  aware,  inactive,  and  Mr.   P.rown  has  not  yet  posted  them  up  for 
1886,  but  will  do  so  as  soon  as  your  statements  for  December.  ISNi.  are  To  hand. 

The  interest  accounts  for  Leland  Stanford,  C.  P.  Huntiugton,  etc..  for  1SS<>,  will, 
when  made  up  and  credited,  of  course  vary  the  amounts  of  their  accounts:  but  you 
will,  I  think,  be  able  to  get  from  the  above  suiucient  general  facts  to  enable  you  to 
understand  how  it  comes  that  such  large  amounts  appear  to  credit  of  L.  S.,  C.  p.  11., 

C.  C.,  and  estate  of  M.  II.,  while  the  assets  are  so  much  less.     Mr.  Hopkins  makes  a 
suggestion  to  Mr.  lirown,  in  which  Mr.  Brown  concurs,  and  which  I  think  would  bo 
well  to  carry  out — that  is,  that  since  "  S.,  H.,  H.,  &  C."  are  now  the  only  parties  in 
interest  in  the  Pacific  Improvement  Company,  that  the  books  of  "S.,  II..  II.,  AC." 
be  written  up,  the  accounts  of  dividend,  interest,  profit  and  loss,  etc..  be  charged 
oil'  as  suggested,  and  the  books  balanced  and  turned  over  with  the  balances  and 
assets  to  the  P.  I.  Co.;  the  P.  I.  Co.  to  transfer  the  balances  of  "8..  II..  II..  A  C.'' 
books  to  the  P.  I.  Co.  books,  and  thus  have  only  one  set  of  books  for  the  accounts  of 
the  parties.  ••>.,  H..  II..  A  (V     Trusting  the  above  will  be  satisfactory.  I  am.  >  our* 
very  truly, 

M.   11.   MII.I.KI:.  .lis. 

Mr.  Chairman,  you  should  not  forget  that  this  immense  sum  paid  out 
for  interest  was  paid  to  the  big  four,  and  not  to  the  Government  or 
the  stockholders.  When  the  Thurman  Act  was  passed,  st'ttin.u  aside  a 
certain  per  cent  of  the  earnings  of  the  Central  Pacific  to  be  applied  on 
the  debt  they  owed  the  Government,  they  tried  to  beat  it  in  the  courts, 
but  failing  in  that  suit,  they  deliberately  set  about  to  defeat  the  object 
of  that  act  by  fraud.  To  this  end  they  incorporated  the  "  Southern 


11 

Pacific  Railroad  of  Kentucky."  They  claimed,  by  incorporating  under 
the  laws  of  Kentucky,  they  could  prevent  the  Government  from  inquir- 
ing into  the  management  of  the  Central  Pacific  and  branch  lines,  by 
leasing  them  to  this  Kentucky  pirate,  and  to  fully  carry  out  this  infa- 
mous scheme,  they  appointed  two  dummies  president  and  secretary  of 
this  Kentucky  abortion  (W.  E.  Brown  as  president,  and  E.  H.  Nash, 
secretary),  who  entered  into  a  lease  of  the  Central  Pacific  for  ninety- 
nine  years,  with  Stanford  and  E.  H.  Miller,  the  president  and  secretary 
of  the  Central  Pacific  Company.  / 

After  securing  the  lease,  these  two  dummies  resigned,  and  Stanford 
and  Miller  were  elected  to  fill  their  places.  Then  the  wrecking  of  the 
Central  Pacific  commenced.  They  claimed  that  the  Central  Pacific 
had  a  floating  debt  of  $12,873,945.61,  which  they  assumed,  and  the 
remarking  of  the  rolling  stock,  and  the  sale  of  the  immense  supplies  of 
the  Central  Pacific  were  turned  over  to  this  Kentucky  bandit  to  pay 
this  assumed  debt,  and  as  this  was  the  transfer  of  property  upon  which 
the  Government  held  a  lien,  it  was  to  that  extent  no  better  than  high- 
way robbery.  The  big  four  fixed  the  price  at  which  this  Government 
property  was  turned  over  to  themselves,  and  from  the  character  of 
their  other  transactions  it  is  safe  to  say  that  they  made  millions  by 
this  transfer.  Thus  the  parent  company  which  had  furnished  all  the 
capital  to  build  up  this  bastard  offspring  was  finally  swallowed  up. 

Stanford  in  his  report  of  these  transactions  touches  the  subject  very 
gingerly,  this  is  what  he  says  : 

On  January  1,  1885,  just  prior  to  the  lease  to  the  Southern  Pacific  Company,  there 
was  a  net  floating  debt  of  $12,873,945.61.  This  has  been  reduced  each  year,  till,  on 
December  31,  1887,  the  floating  debt  was  wiped  out  and  there  remained  a  surplus  of 
$1,970,194.65  The  result  has  been  chiefly  accomplished  by  the  sale  of  supplies  and 
materials  011  hand  to  the  Southern  Pacific  Company  at  the  commencement  of  the 
lease,  by  the  nonpayment  of  dividends  for  the  period,  and  by  the  issue  of  bonds. 

I  may  as  well  give  the  people  some  light  upon  this  Kentucky  pirate 
which  assumes  the  prerogative  of  robbing  the  people  of  California,  as 
well  as  the  Government,  of  their  just  rights.  It  was  incorporated  by 
the  legislature  of  Kentucky  March  12,  1884.  The  incorporators  were 
Henry  D.  McHenry,  William  G.  Duncan,  Samuel  E.  Hill,  Samuel  M. 
Cox,  and  Henry  McHenry,  jr.,  who  were  dummies  of  Stanford,  Himt- 
ington,  Hopkins,  and  Crocker,  and  who  assigned  the  franchise  of  the 
big  four. 

The  act  forbids  the  company  doing  business  in  the  State  of  Kentucky, 
but  gives  it  a  license  to  prey  upon  all  the  rest  of  the  world.  Its  capital 
stock  is  $1,000,000,  with  the  privilege  of  increasing  it  to  any  amount 
deemed  necessary  for  the  transaction  of  its  business;  but  in  no  event 
are  the  stockholders  responsible  for  more  than  $1,000,000.  After  the 
big  four  possessed  themselves  of  this  franchise  they  increased  the 
capital  stock  to  $100,000,000,  and  later  on  they  increased  it  again  to 
the  amount  of  $150,000,000.  Thus  the  great  State  of  Kentucky  has 
sent  out  this  pirate  corporation  with  a  commission  to  rob  all  the  world 
whenever  it  pleases,  using  a  capital  of  $149,000,000  free  from  any  lia- 
bility to  stockholders,  making  only  owe  exception — they  must  not  enter 
the  sacred  territory  of  blue  grass,  fine  horses,  and  whisky.  Kentucky 
must  be  exempt  from  their  operations. 

Now,  Mr.  Speaker,  I  wish  to  insert  here  a  few  tables  compiled  by  the 
Pattison  commission,  showing  the  total  amount  of  aid  received  by 
these  bond-aided  railroads,  the  earnings  which  have  found  their  way 
into  the  pockets  of  the  managers,  and  the  principal  and  interest  paid 
and  to  be  paid  by  the  Government  at  the  maturity  of  the  bonds,  and 
the  methods  pursued  by  these  companies. 


12 

Aid  from  all' sources. 


Principal  and 

intcrestadvauces 
paid  and  to  be 
paid  l)v  United 
States. 

Value  of  land 
u  rant—  sold  and 
unsold. 

Aid  from  . 

other  sonr<  e.4 

j   $92,844,290.94 

4,  426,  608.  26 
4,  509,  255.  89 

\     77,104,604.41 

$44,  911,  637.  77 

1,  000,  000.  00 
•j:t'.i,  364.  60 
19,  832,  581.  24 

$-250,  000.  00 

Sioux  City  and  Pacific    :.... 

•J»55,  G8ti.  00 
-'.  191.  24 

Central  Pacific 

"Western  Pacific 

Total  

178,  884,  759.  50           65,  983,  583.  61 

3,  070,  877.  24 
Total  aid. 

Aid  exclusive 
of  use  by  com- 
panies until  ma- 
turity of  annual 
interest  pay- 
ment by  Gov- 
ernment. 

1  sf  until  matu- 
rity in   l#)5-'99 
of  annual  inter- 
est payment^  on 
lia.sis  of  <i  per- 
cent. 

Union  Pacific 

1  $138,  005,  928.  71 

008.26 
:!06.49 

|     99,  492,  376.  89 

$103.  690,  859.  36 

4,  946,  564.  96 
5,034,119.16 

86,  118,  706.  71 

$241,6T6,788.07 

10,373,173.22 
10,01- 

185,  61  1,  083.  6t 

Kansas  Pacific 

Sioux  City  and  Pacific         -          -          

Central  Pacific 

Wwtern  Pacific 

Total                                               

247,  939,  220.  35 

199,  790,  250.  19 

447,  729,  470.  *4 

Bonds. 


Company. 
Union  Pacific 

Mileage. 
1  038  68 

Principal  of 
subsidy  bonds. 

$°7  236  512  ? 

Interest  ac- 
crued and  to 
accrue  to  date 
of  maturity. 

Principal  and 
paid 
an.)  t<>  lie  paid 
bv  United 

itOS. 

Kansas  Pacific 

W,  114 

6  303  0005 

$59,  304,  778.  94 

$92,  844,  290.  94 

100  00 

1  600  000 

2  826  608  26 

4  426  608  26 

Sioux  City  and  Pacific 

101.77 

1  628,320 

2  880  935  89  i 

4  509  255.89 

Central  Pacific  

737.50 

25.885,120? 

Western  Pacific 

123  16 

1  MO  560$ 

49,248,9*24.41 

77,  104,  604.  41 

Total 

2  495  05 

64,623  512 

114  261  247.50 

178  884  759.50 

PROFITS  OF  $278,023,357.63  IX  OPERATING  THE  ROADS 

The  reports  of  these  companies  show  the  following  figures  relating  to  operation, 
disclosing  a  profit  or  net  earnings  of  ^L'Ts.tL1;;,:;:.?.!;:;,  r.|ii;iling  $15,000,000  a  year. 


Road. 

/•:«  rniinj 

8  table. 
Gross  earnings. 

Operating  ex- 
penses. 

Net  earnings. 

Union  and  Kansas  Pacific 

$315,303,504.66 
274.139.U6.27 

$169,916,078.90 
149.199.102.40 

$145.387,425.76 
124,  940,  013.  87 

Central  Pacific  Railroad,  from  1863  to  December  31, 
1886...                                                                  ...... 

Sioux  City  and  Pacific  Railroad,  from  July  30,  I860, 

to  June  30,  1887 9,187,359.50  6,423,596.82  2,763,762.6* 

Central  Branch  Union  Pacific 12.  849,  403. 47          7, 917. 308. 15          4, 932, 155. 32 


Total 611,479,443.90       333,456,086.27       27*.  023,  357. 63 


OVER    $25,000,000   FOR   POOLS,    REBATES,    AND   OVERCHARGES. 

In  addition  to  the  gross  earnings  given  as  above,  the  bond-aided  companies 
received  the  following  sums,  which  they  subsequently  paid  out  on  account  of 
pools,  subsidies,  rebates,  overcharges,  etc. : 


13 


Road. 


Pools,  rebates,  and  overcharges. 
Pools. 


Rebates  and 
overcharges. 


Total. 


Kansas  Pacific                             5 

$4,  004,  512.  48 

$11,  577,  091.  62 

$15,581,604.10 

Sioux  City  and  Pacific 

401  832  01 

Central  Pacific 

9  882  799  61 



Total                                             



25,866  235  72 

Had  the  Pacific  railroads  been  built  and  managed  upon  honest  methods,  had  the 
Government  loan  been  properly  applied,  these  companies,  regarded  as  a  whole, 
«ould  have  declared  dividends  at  the  rate  of  6  per  cent  per  annum  for  eighteen 
years,  from  the  date  of  actual  completion  to  the  present  time,  upon  all  the  moneys 
that  they  would  have  been  required  to  pay  in  to  complete  and  equip  the  roads. 
They  would  have  owned  2,495  miles  of  road  free  from  all  debt  and  worth  $124,600,000, 
upon  an  original  outlay  of  less  than  $35,490,381.44.  Three  of  them,  the  Union  Pacific, 
Central  Pacific,  and  Central  Branch,  could  have  repaid  every  cent  of  the  principal 
and  interest  advanced  by  the  Government  to  date,  and  could  have  reduced  their 
charges  to  shippers  to  the  extent  of  over  $140,000,000,  or  nearly  $8,000,000  per  year. 

For  $1  the  stockholders  would  have  realized  $1.07  in  dividends  in  eighteen  years 
and  $1  11  in  land  sales.  The  property  would  have  been  free  from  debt,  and  for 
every  dollar  that  they  had  invested  the  stockholders  would  have  had  in  property 
over  $4;  so  that  in  eighteen  years  each  dollar  would  have  yielded  $6.18. 

But  they  chose  dishonest  "methods.  At  the  outset  theV  divided  $172,347,115  of 
fictitious  capital,  they  dissipated  over  $107,000,000  which  should  have  been  applied 
to  the  payment  of  the  principal  and  interest  of  the  Government  debt,  and  they 
taxed  shippers  to  the  extent  of  over  $140,000,000,  or  nearly  $8,000,000  a  year,  to  pay 
for  the  inflation  of  the  capital  of  these  companies  and  for  the  vicious  practices  that 
«rept  into  their  management. 

Method  actually  pursued. 


Union      and 
Kansas  Pa- 
cific. 

Central 
Branch. 

Sioux  City 
and  Pacific. 

Central     Pa- 
cific. 

Total. 

•Cost  of  construction  
Capitalization  

$50,  624,  000.  00 
134,  843,  06£.  00 

$2.  731,  347.  23 
4,200  000.00 

$2,  600,  000.  00 
5,047  720.00 

$40,  000,  000.  00 
124  211  680  00 

$95,  955,  347.  23 
268  032  462  00 

Fictitious  capital  put  on 

84  21Q  062  00 

1  468  6^)3  00 

2  447  720  00 

84  211  680  00 

172  347  115  00 

Actual  net  earnings 

145  387  425  76 

4  932  155  00 

2  763  762  68 

124  940  013  87 

278*  023*  357  63 

Land  sales  

30  907  367.77 

1  000  000  00 

239  364  60 

7  332  581  34 

39*  479  313  71 

Amount  credited  by  Gov- 
ernment   to    November 
1   1887 

21  597  575  76 

316  124  12 

131  023  62 

8  913  416  11 

30  959  039  61 

Net    earnings    and    land 
sales  in  excess  of  the 
amounts     credited     by 
Government  

154,  697,  217.  77 

5  616,030  88 

2  871  203  66 

123,359  179  10 

286  543  631  41 

Dividend  of  6  per  cent  per 
annum  for  18  years  on 
outlay  to  have  been  re- 
quired of  stockholders  .  . 
Amounts  dissipated  

18,  383,  207.  04 
136,  314,  010.  73 

1,  245,  991.  33 
4,  370,  039.  55 

762,  473.  52 
2,  108,  730.  14 

17,  937,  940.  06 
105,  421,  239.  04 

38,  329,  611.  95 
248,  214,  019.  46 

I  have  treated  these  bond-aided  roads  as  a  whole,  because,  if  the 
policy  of  extending  the  time  for  the  payment  of  their  debts  is  adopted 
by  Congress,  they  will  all  claim  the  same  rights,  and  Congress  can 
not,  with  justice,  apply  one  plan  for  settlement  with  the  Union  Pacific 
and  another  plan  for  the  Central  Pacific.  We  must  either  extend  all 
their  debts  or  call  them  all  to  a  settlement. 

The  Central  Pacific,  fearing  justice  will  be  done  them  for  their  many 
rascalities,  and  that  they  will  be  called  upon  to  settle  with  creditors  in 
the  near  future,  have  filed  a  lot  of  claims  against  the  Government, 
which  they  dub  "equities."  I  propose  to  briefly  look  into  these  "equi- 


14 

ties"  ami  sec  what  merit  they  have.     Here  is  the  first  one  (p.  91,  Pat- 
tison  report) : 

(1)  The  loss  and  interest  thereon  which  the  company  sustained  by  being  forced  to 
sell  the  bonds  received  by  it  from  the  Government  at  a  discount : 

Loss $7,120,073.55 

Interest  to  maturity. 12,  816, 132.  39 

19,  936,  205. 94 

llere  they  claim  $19,936,205.94  for  loss  on  the  sale  of  the  bonds  which 
the  Government  loaned  them.  If  they  sold  these  bonds  at  a  discount 
nobody  is  responsible  for  that  act  but  themselves;  the  Government  has 
paid  interest  upon  them  since  they  were  issued,  and  at  maturity 
will  have  to  pay  their  full  face  value,  and  it  makes  no  difference  to  the 
Government  whether  they  were  discounted  $7,000,000  or  $40,000,000. 

These  men  might  as  well  put  in  a  claim  for  $40,000,000  as  any  other 
sum,  because  they  used  them  for  the  payment  to  themselves  for  con- 
structing the  road,  and  the  "  contract  and  finance  committee"  divided 
the  surplus  between  the  big  four.  But  the  cheek  of  these  bandits  in 
claiming  ^li'.sK;.!;',!'.:;'.!  for  interest  upon  this  discount  is  equal  to  that 
of  a  Government  mule. 

The  second  "equity"  is  worse  still. 

(2)  The  amount  \vhich  the  Government  >aved  in  its  transportation  on  the  (Vntral 
and  Union  Pacific  line  between  the  completion  of  the  road  in   May.  1SW.  ami  Time 
when  it  might  have  been  completed  under  the  contract,  i.  6.,  .Inly  1, 1876,  $47,768, 17& 
This  company's  proportion,  say  46  per  cent,  ^LM.itT: 

Here  they  claim  -^  17, 7(1.1, ITS  for  completing  their  roads  seven  years 
too  soon.  They  had  the  use  of  the  roads  for  seven  years  without  any 
competing  line,  and  charged  what  they  pleased  for  transportation  of 
freights  and  passengers,  and  on  many  parts  <»t  their  roads  laic  was  as 
high  as  10  cents  per  mile.  They  received  their  bonds  in  payment  for 
building  the  roads  in  1869,  and  divided  the  earnings  of  these  seven 
years  which  amounted  to  over  $35,000,000,  and  yet  they  come  here 
with  a  claim  for  $47,763,178  against  the  Government  which  is  based 
upon  the  difference  of  transportation  between  the  old  ox  team  and 
their  railroad.  A  set  of  men  who  would  trump  up  such  a  claim  after 
receiving  such  magnificent  donations  from  the  Government  should  not 
be  permitted  to  operate  these  roads  a  day  longer  than  the  time  when 
the  Government  can  seize  them  for  its  debt. 

These  same  men  were  so  contemptible  as  to  swear  that  their  roads 
were  completed  in  1869,  in  order  to  draw  their  bonds,  and  they  now 
set  up  this  claim  to  beat  the  Government  out  of  this  large  sum.  as  well 
as  to  avoid  payment  of  the  5  per  cent  net  earnings  for  this  period  of 
seven  years. 

Here  is  another  "equity,"  which  is  absolutely  fal 

(4)  The  amount  of  loss  which  the  company  has  directly  sustained  by  reason  of  the 
refusal  of  the  Government  to  grant  the  company  patents  for  its  lands  as  rapi<; 
called  for,  say  $500,000. 

They  claim  here  $500,000  damages  on  account  of  the  Government 
refusing  to  patent  their  lauds. 

Their  land  holdings  when  the  Pattison  Commission  reported  were 
valued  at  $26,504,270,  and  they  absolutely  refused  to  patent  an  acre 
until  it  was  sold  and  paid  for,  in  order  to  avoid  paying  taxes  upon  this 
immense  property. 

The  State  of  Nebraska  passed  laws  to  compel  them  to  take  out 
patents  for  their  lands  and  they  resisted  them  in  the  courts,  and 


15 

defeated  the  law.  There  have  been  two  bills  introduced  in  this  Con- 
gress upon  this  question,  one  by  myself,  to  compel  them  to  patent  their 
land  within  one  year  or  forfeit  it  to  the  Government,  and  the  other 
by  Mr.  Maguire,  to  refuse  any  patent  until  their  debts  are  paid  to  the 
Government.  Either  of  these  bills  will  soon  settle  the  ownership  of 
these  lands. 

I  give  one  more  specimen  of  these  " equities:" 

(6)  Loss  by  diversion  of  business  from  Central  and  Union  Pacilic  to  other  sub- 
sidized roads,  $37,000,000;  Central  Pacific's  proportion  of  which,  46  per  cent  is,  say, 

$17,000,000. 

Here  they  claim  $37,000,000  for  diversion  of  trade  from  the  Union 
and  Central  Pacific.  They  set  up  a  claim  to  all  the  territory  between 
the  Mexican  border  on  the  south  and  British  Columbia  on  the  north, 
and  charge  the  United  States  $37,000,000  for  permitting  any  other 
railroad  to  be  constructed  across  the  continent. 

I  can  not  use  language  strong  enough  to  express  my  contempt  for 
these  men  and  their  "equities."  They  have  shown  such  a  disregard 
for  all  decency  in  setting  up  these  fraudulent  claims  that  Uncle  Sam 
should  demand  an  immediate  divorce  from  them.  Our  answer  to  these 
"multimillionaire  paupers"  should  be,  "  Pay  your  debts  or  retire  from 
business." 

These  great  corporations  have  interfered  with  our  elections  in  many 
States  for  the  last  quarter  of  a  century.  In  my  State  they  wielded 
such  powerful  influence  that  no  man  dared  denounce  them  or  expose 
their  villainies  if  he  expected  to  be  elected  to  Congress. 

Our  railroad  commissioners  are  generally  believed  to  take  their  orders 
from  "Fourth  and  Townseud  streets,"  and  when  the  people  appear 
before  them  and  demand  relief  from  excessive  rates  of  fares  and 
freights  they  pop  up  like  Macbeth  witches  and  exclaim,  "  Say,  if  thou'dst 
rather  hear  it  from  our  mouths  or  from  our  masters'? w  and  then — 

The  weird  sisters,  hand  in  hand, 
Posters  of  the  sea  and  laud, 
Thus  do  go  about,  about: 
Thrice  to  thine,  and  thrice  to  mine, 
And  thrice  again,  to  make  up  nine. 
Peace ! — the  charms  wound  up. 

And  you  get  your  orders  from  the  great  octopus. 

I  stand  here  in  defense  of  the  great  State  of  California  and  her  brave 
pioneers,  who  have  been  robbed  for  thirty  years  by  this  corporation, 
and  demand  that  it  retire  from  business  and  loose  the  fetters  which 
have  held  us  in  their  grasp  for  more  than  a  generation. 

I  know  that  the  power  of  this  great  corporation,  which  has  not 
inaptly  been  compared  to  that  of  the  devil-fish,  has  extended  its  influ- 
ence in  almost  every  direction.  I  know  that  the  clank  of  its  golden 
fetters  has  been  heard  along  the  corridors  of  the  Capitol,  and  upon  this 
floor  in  times  gone  by.  I  know  the  mildew  of  its  corrupting  influence 
has  crept  over  the  desks  of  those  who  should  have  defended  the  people. 
I  know  that  its  guilded  finger  of  menace  has  been  raised  to  stifle 
voices  that  should  have  been  heard  in  defense  of  the  people  in  all  our 
great  political  conventions. 

But,  as  yet,  I  believe  its  ministering  messengers  of  corruption  have 
had  no  influence  upon  the  members  of  this  House. 

Although  we  may  daily  see  its  agents  in  the  lobby  and  upon  the  floor 
of  the  House,  and  its  officers  appearing  before  our  committees,  yet  I 
am  persuaded  that  they  have  not  swerved  a  single  member  of  the  House 
or  the  committee  from  the  duty  they  owe  to  the  State.  So  long  as  this 


16 

is  so,  we  are  safe;  but  should  the  time  come  again  when  these  cormorants 
shall  invade  the  halls  of  legislation,  as  they  have  heretofore,  then  the 
time  for  revolution  has  arrived  and  the  days  of  government  bylaw 
will  be  numbered,  for  the  people  of  this  country  to-day  are  not  in  a 
humor  to  be  trifled  with  longer  upon  this  subject. 

Now,  Mr.  Oh  airman,  in  conclusion,  I  suggest  the  folio  wing  line  of  action 
by  Congress :  Foreclosure  of  the  Government  lien ;  take  the  management 
out  of  the  hands  of  these  corrupt  and  dishonest  men  who  have  wrecked 
the  Central  Pacific ;  bring  suit  to  restore  to  the  Central  Pacific  the  leases 
of  the  branch  lines,  including  the  Southern  Pacific,  that  it  held  in  1885, 
when,  through  fraud,  they  were  turned  over  .to  the  Southern  Pacific  of 
Kentucky.  Push  these  suits  against  all  estates  and  individuals  to 
whom  any  portion  of  said  assets  and  property  can  be  traced,  without 
fear,  favor,  or  affection. 

The  Central  Pacific,  in  the  hands  of  the  Government,  with  all  the 
branch  lines  in  California  under  its  control,  is  a  magnificent  prop 
erty,  and  in  a  few  years  will  be  able  to  command  such  a  price  on 
the  market  that  the  debt  would  be  secured.    The  Government  could 
then  sell  or  lease  the  road,  should  it  find  ownership  embarrassing. 

Some  of  my  friends  from  the  South  bitterly  oppose  Government 
ownership,  claiming  that  it  would  inject  a  corrupting  influence  into  the 
administration  of  the  State.  But  their  fears  arc  groundless,  for  to-day 
the  Government  lias  control  of  1">1*  railroads,  and  is  managing  them 
through  its  courts  without  corrupting  the  administration. 

Now,  Mr.  Chairman,  in  conclusion.  I  will  group  the  incomes  from  all 
sources  of  these  bandits,  so  as  to  show  their  rascalities  at  a  glance. 

Profits  upon  construction - 1 .  057 

Net  earnings 338, 023,  357 

Aid  from  all  sources "2 17.  !•:;  • 

Kebates 25,  SN 

Leases : 

Union  I'arilie 38,800,000 

Central  Pacific 29,912,373 


Grand  total 932, 422, 244 

And  yet  these  paupers  come  before  Congress  and  ask  an  extension 
of  time  for  fifty  years  to  continue  their  rascalities,  and  expect  us  to 
leave  the  management  of  these  great  public  highways  of  commerce  in 
their  hands  for  another  half  a  century.  Will  you  do  it?  This  ques- 
tion must  be  answered  by  your  action. 


10    08  5 


